US stocks soar, Dow up


  • Business
  • Sunday, 27 Jul 2003

By Elizabeth Lazarowitz

NEW YORK: US stocks surged on Friday, with the Dow average hitting a five-week high, after a surprisingly strong durable goods report bolstered investors’ confidence that an economic rebound is on its way and traders snapped up shares hit in Thursday’s sell-off. 

The market waffled around unchanged in early trading, but staged a late-day rebound that helped the Dow Jones industrial average post its biggest one-day percentage gain since mid-June and its fourth straight week of gains. 

All of the Dow’s 30 blue-chip components were up on Friday with four diverse names – Alcoa Inc, General Electric Co, Intel Corp and Microsoft Corp – posting better than 3% gains. 

And 3M Co gained US$2.05, or 1.5%, to US$141.40 – an all-time high for the maker of everything from Post-It notes to fibre-optic connectors. 

A government report showed new orders for costly manufactured goods shot up in June at the fastest rate in five months. Orders for durable goods climbed 2.1%, beating forecasts for a 1.0% increase, and fuelling optimism an economic recovery is shaping up. 

In another report, the government said sales of new US homes jumped 4.7% to a record pace in June of a seasonally adjusted annual rate of 1.160 million – surprising Wall Street analysts who had expected sales to slip to a rate of 1.120 million. 

“People came in in the morning thinking ‘sell’ and once they looked at the economic data, they realised it was better than expected,” said Adam Tracy, director of listed trading at Thomas Weisel Partners. 

The Dow jumped 172.06 points, or 1.89%, to 9,284.57, its highest close since June 18. The broader Standard & Poor’s 500 Index climbed 17.08 points, or 1.74%, to 998.68, according to the latest available data. The technology-laced Nasdaq Composite Index jumped 29.28 points, or 1.72%, to 1,730.70. 

For the week, the Dow rose 1%, the Nasdaq Composite climbed 1.3%, and the S&P 500 advanced 0.5%. 

Trading was active, with about 1.4 billion shares traded on the New York Stock Exchange and 1.6 billion shares traded on Nasdaq. 

Hopes that the US involvement in Iraq will soon wind down also gave the market a boost after the death of former Iraqi leader Saddam Hussein’s sons and the capture of several men suspected of belonging to his bodyguard unit, traders said. 

Those factors helped overshadow forecasts from several tech companies, including JDS Uniphase Corp, the world’s largest supplier of parts that boost the speed and capacity of fibre optic networks, and KLA-Tencor Corp, a leading maker of semi-conductor production gear. 

Investors also focused on the bright spots in a mixed bag of corporate scorecards, including diesel engine maker Cummins Inc.  

The market fell sharply late Thursday on technical selling, and investors took the opportunity Friday to nibble at beaten-down stocks. 

“Every time the market backs off, it seems like buyers come back in on the dip,” said James Volk, managing director of equity trading D.A. Davidson and Co.  

“It’s obvious people are looking for excuses to buy stocks.” 

Shares of Cummins surged US$7.22, or 19%, to US$45.16 after it reported an unexpected rise in its quarterly earnings on a rebound in diesel engine business revenue. 

But after the market’s strong springtime run, with the S&P 500 up about 25% from its 2003 low on March 11, a relatively solid earnings reporting period has largely left investors cold. 

In other economic readings, sales of existing US homes edged down 0.3% in June, while inventories jumped to the highest level in nearly 12 years, the National Association of Realtors said. 

Existing home sales fell to a seasonally adjusted annual rate of 5.83 million units from a revised 5.85 million rate in May, shy of forecasts for a rate of 6.0 million homes. - Reuters  

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